Business Environment Analysis: Types, Scope, Functions, and PESTLE

This report provides a comprehensive analysis of the business environment, examining different types of organizations (public, private, and voluntary), their purposes, and scopes (micro, small, medium, and large). It explores the relationships between various organizational functions, such as marketing, human resources, finance, and research and development, emphasizing their interconnectedness for effective business operations. The report further delves into external factors through PESTLE analysis, assessing the political, economic, social, technological, legal, and environmental influences on businesses. It also incorporates SWOT analysis to evaluate internal strengths and weaknesses and external opportunities and threats. The analysis highlights the correlation between internal and external factors, providing insights into strategic decision-making and the overall success of businesses in a dynamic market environment. The report uses examples like BBC, John Lewis, and Unilever to illustrate concepts.

BUSINESS AND THE
BUSINESS ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Types and purposes of organization............................................................................................1
Size and scope of different organizations....................................................................................3
Relationship between different organizational functions............................................................6
PART 2............................................................................................................................................7
PESTLE ANALYSIS..................................................................................................................7
Swot analysis.............................................................................................................................10
Correlation between internal and external factors.....................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business environment refers to the internal and external such as employees, customers,
needs, expectation, clients, suppliers, owners, innovation in technology, etc. These factors are
going to impact on the working of an organization directly or indirectly. Businesses will have to
know their functioning in market will so that they can have an effective decision making for
themselves in the future.
The report would cover the organizations internal and external factors so that they can
have an effective functioning for themselves which will help them to make decisions for the
organization accordingly. Report would also consist of SWOT and PESTLE analysis of the
organization so that they can understand the functioning for themselves. There are a lot of
changes which are taking place in organization and they have to be in favour of the organization
therefore they have to take decisions accordingly.
PART 1
Types and purposes of organization
There are three types of organizations which are going to be discussed in the further
report which are private, public and voluntary. All types have a different functioning in market
and have a different set of rules and regulations for themselves so that they can function
productivity and achieve their objectives.
Public Sector
Public company is those which distribute its shares in general public to increase the
capital of business and increase productivity. There are more than 200 members in the
organization who are a shareholder in organization which is going to make a huge impact in
company. Anyone can become a member of a public company but the rules and regulations
which this industry has been different from private and voluntary (Hillary, 2017). BBC is a
United Kingdom organization which is providing information to the people to make a better
decision. BBC is a public organization whose aim is to provide the citizens effective information
in effective communication medium and at a low price.
Purpose The purpose is to make the customers have a high satisfaction level so that they can have
a comfortable living for themselves.
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Private Sector
Private sectors comprises of companies whose share are not distributed to public to raise
capital and reduces its liability. The rules and regulations which this company has been very
different from the private organizations and the maximum shareholders which the organization
can have been not more than 200 members. These are profit organization because private
organizations main aim is to get profit in market and to get that objectives they plan and use
techniques accordingly (Alotaibi and Liu, 2017). Anyone can start their own private
organizations with the kind of capital they have in hand. John Lewis partnership is a private
organization which is dealing in clothing, watches & jewellery, cosmetics, furniture, beds &
bedding, etc.
Purpose
 Employees work more than the public sector and the main aim of the private organization
is to earn a lot of profit. The quality of the goods are maintained which is a great factor
for the organization so that the organization can get a lot of revenue for themselves.
 Focus of private organization is to maintain their sales and to generate high profitability
in market. The government can not have any control on these organizations directly but the imports
and exports of the organization can get affected. Decisions are taken by the organization
directly which is going to be very helpful for the organization.
Voluntary Sector
The business which has the motive to provide social welfare and do not work ofr profit
maximisation lies under voluntary sector. These are those organizations which function in
market so that they can make the living of the customers to a comfortable standards way of
living in world. It is very important for the customer to know their basic rights so that they can
fight for themselves and make a living for themselves (Verma and Sharma, 2017). Oxfam is a
United Kingdom originated organization which is a non-governmental organization. This gets a
lot of rules and regulations for this organization also which are different form public and private
organizations in market. There are more than 290 different charities which have come together
under this nongovernmental organization, WaterAid is one of voluntary organisation which helps
to increase the productivity of citizens of UK effectively.
Purpose
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 This will get the poor people know their rights in the country so that they can fight for
themselves if something wrong is being happening to them by the society or the world.
 The purpose of the organization is not to earn profit in the market but to use the profit to
make more people aware about the rights and educate them so that they can stand up for
themselves in the world.
Size and scope of different organizations
Basis Micro
Organizations
Small
Organizations
Medium
Organizations
Large
Organizations
Size This is a start-up in
market with 10
people in operations.
This is the smallest
scale in business and
requires capital to
produce their services
and products which
reaches the customers
from time to time
(UK SME Data, Stats
& Charts, 2020).
Example Boss
brewing company
which is changing the
beer industry in the
country. They do not
have a vision of a
long run but just
profit which they can
earn in market.
There are not more
than 50 employees
working in a small
business and in
United Kingdom
they can not have a
turnover more than
£6.5 million.
Example CafePod
Coffee Co which
is making the
country have a
different coffee
experience for the
customers.
There are 0.6% in
United Kingdom
which are medium
size businesses in
the country and the
number of
employees in this
organization are
not more than 250
employees.
Example
Pharmacy2U is an
online medical
store which is
providing the
customers with
their needs and
demands.
There are more
than 250
employees
working in large
businesses in
market. TYHe
turnover should
be huge and the
focus should be of
having a
sustainable market
and loyal
customers and
satisfying them.
Example Unilever
is large base
organization and
having more than
155,000
employees
working in the
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organization.
Scope There are no
technologies which
are used in the
organization and
focuses on the local
market in the
country.
These are the
backbone for the
country
economically and
opening for new
market. There are
fresh ideas which
generate in these
businesses. There
are a lot of new
ideas which
CafePod has
innovated in the
coffee they are
serving the
customers.
Use of technology
is huge in this
business but not as
much as large
organization. Ideas
will be limited and
adapt from the
small businesses in
market
(Krishnamoorthi
and Mathew,
2018).
Use of technology
is the most in this
type of industry
which will make
the organization
have a high
productivity level
and they can
satisfy the
customers in
market.
Objectives  This will
increase the
income level
of the people
in the country
and there will
be a better
living of the
people in the
country.
 Micro
businesses
will get the
 Have a
stable and
profitable
business
for
themselves
in market
so that they
can grow in
the future.
 Mission
driven and
core values
 There are
strategies
which are
worked in
organizatio
n so that
they can
have
maximized
of profit
and
increase the
market
 Increase
the
productivit
y is the
main aim
of the
organizati
on so that
they can
have a
stable
stand for
themselves
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local business
to a national
mainstream
development
so that the
organization
and the
people can
benefit from
it. They are
not in the
market for a
long run and
just want
profit for as
long as they
are in the
market.
are present
in these
kinds of
businesses
so that they
can achieve
their
objectives
and aims
for a long
run in
market.
share.
 Expand the
current
business
and have a
better
market for
themselves
so that they
can grow
and
compete
with the
large
organizatio
ns in
market.
in the
market.
 Attract
more
customers
in the
organizati
on so that
they can
have a
stable
market for
themselves
and have a
good
quality of
products
which are
being
served to
the
customers
(Belas and
et.al.,
2019).
There are three organizational structure which are international, global and transnational
organization. International organizations are focused on import and exports and have no
investments outside their own countries. This is not complex in nature and can be done by small
and medium organizations in country (Civelek and et.al., 2016). Global organization are present
in many other countries and market their products in different countries. There is efficiency and
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cost management which is included in this type of business which will make the organization
have a better functioning for themselves. Transnational organizations is a very complex
organization and they have foreign operations in market in other countries. This gives research
and development, decision making and marketing power to each of the individuals in the foreign
market.
Relationship between different organizational functions
For an organization to function effectively it is very important to have a balanced
between all the departments which are there in an organization. In case if that is missing in any
organization then the functioning and the productivity level of the organization or business will
fall and the demands and needs of the customers will not be able to be met from time to time
(Alaloul, Liew and Zawawi, 2017). In Unilever it is very important for all the departments to
work together so that they can have a better functioning for themselves and get a competitive
advantage for themselves.
 Marketing and human resource
Unilever's marketing department is very effective therefore the strategies they use for
promotions or making the customers satisfied with the products they are having are very good.
Marketing team of Unilever is having an effective functioning for them and are very time
effective which is why they are being able to meet the objectives and standards of the
organization which is very good for Unilever. Marketing working with other departments can
make the company get in a lot of loyal customers in the company which will make the company
have a higher profit margin.
 Finance and marketing
Finance of Unilever divides all the work and funds all the departments so that they can
function effectively and still make a profit in market for the organization (Hair Jr, Page and
Brunsveld, 2019). This is a very important factor for the organization to have so that they can the
other departments can get what they want to increase the productivity and motivate the
employees. Finance has to make sure that the organization is being able to have a good
functioning and productivity for themselves. There has to be a control on the finance of the
company so that there is a better calculation and decisions for the planning of the company for
the future which will be more effective for the company.
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 Research and Development and Marketing
Research and development department have to get changes in the organization so that
with the change in customers needs and demands the organization can have an effective
functioning and sustainability in market (Skripak, 2016). It is very important for the research and
development department to change the products in organization so that they can have an
effective functioning for themselves. There are a lot of changes which are taking place in
Unilever so that the demands of customers are met and there is a sense of satisfaction in
customers. This will give the company a unique identification which is a great profit for the
company and the company will be able to have a competitive advantage in the market.
 Human Resource and finance
Human resource has to get the right candidates in organization and have to make sure that
they are being able to meet the standards and demands of the organization so that the
productivity of Unilever can be maintained. Human resource has to motivate the employees from
time to time and provide with training so that they can meet the demands and standards of the
customers so that the organization can have an effective functioning for them. The standards and
the culture of the company will be maintained which is a great factor for the company to function
in the market and the company will be able to have a higher productivity and get a competitive
advantage.
Interrelationship of these management operations enables us to analyse the varied impact and
functional parameters onto which it could be understood that Uniliver company operations are
highly coordinated within each department which enables in reaching strong profitability and
higher goodwill.
Advantages
Operational speed of Unilever is maintained and the standards are being achieved in
Unilever because of the bind which each department has with one another. There is a clarity of
work, roles and responsibilities which have in the organization so that there is a better
functioning for them (Kasim, Haracic and Haracic, 2018). For an effective and productive
functioning in market it is very important for all the departments of the organization to function
together which will make the organization have a competitive advantage in market.
Disadvantages
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The organization will not be able to make the productivity increase and the demands and
needs of the customers will not be met from time to time which is a very important factor for
them. This will weakness the competitive advantage which Unilever is having in market and the
bond in all organizations will fail. There will be communication gap and the functioning in
organization will reduce (Tho, 2017).
PART 2
PESTLE ANALYSIS
Macro environment has high positive as well as negative impact on business operations
of business in a company which can be analysed through Pestle analysis. Evaluation of macro
environment enables managers to construct business strategies based on how are operations
affected in company performance levels. Positive and negative impacts of macro environment on
business operations in competitive retail industry of UK where large companies such as Marks
and Spencer, Sainsbury, Asda and Tesco operational structures can be analysed as follows-
Political factors
 M&S has been facing negative impacts due to changing political scenario of UK
economy due to Brexit decisions of its partition from European Union, which has
affected business scale largely on global platforms (De Klerk,2019).Company has been
facing large looses due to unstable political situations due to which business strategies of
operating business in European countries has been largely impacted. There are high tariff
barriers for companies to enter into market share of Europe where company stores are
unable to gain competitive edge in retail industry and is facing large economy losses. Sainsbury business operations are highly negatively impacted due to political unrest and
changing business policies with European Union where it posses large market share.
Company has been facing difficulty in delivering quality performance standards to all
consumers in stores of European countries due to high tariff rates and decreased supply of
goods. This has brought business scale of company significantly down reportedly losses
in financial performance level of market share.
Economic factors
 Decline in disposable incomes of consumers due to low economic growth in UK
economy has made Tesco business strategies negatively impact its growth potentialities.
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Tesco has announced to simplify business operations by cutting down 1700 employee
jobs which will impact company significantly on various levels. Company is highly
dependent on revenue earned from internal economy where it posses 30% of market
share having large grocery market share along with large varieties of products and
services. Cost leadership strategy of company in being the goodwill brand among
consumers globally is highly impacted due to changing economic scenario. Asda has initiated cost-cutting business strategies to gain performance advancement in
competitive retail industry, where company has cut down many jobs of employees in
management. Retail giant has been facing changes in revenue due to changing economic
positions of UK, increased tariff to expand its business in Europe market where company
has large number of stores (Inha,Katko and Rajala,2019).
Social factors
 M&S economic factors impact can be analysed as company is unable to deliver new trend
fashionable clothes to people who look for more innovative products and services.
Changing social factors among consumers such as demand for fashionable clothes and
huge satisfied products quality standards has highly impacted its business deliver
strategies. M&S plans to innate management operation with versatility of products and
services in all stores and serve customers with new trends among clothes to regain the
established brand goodwill of market share. Tesco is facing huge changes in business operations due to changing social factors where
consumers preference are highly dynamic and trend of online shopping has been
emerging s latest trend among consumers. Tesco plans to develop flexible online
shopping networks for consumers who look for online shopping avenues and consider
fast delivery options, fast return of products. Company can pace up with recovery in
captivating market share by regulation of new business strategies to build dynamic
growth among consumers.
Technological factors
 Tesco embraces technological advancement in production equipments and consumers
services delivery as high growth opportunities among competitive retail market share.
Changing technological factors has positively impacted company to get advantage among
other brands where it aims to deliver quick services to consumers globally. Company
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plans to scale up all business operations with advanced modernization and high
technology usage for flexible quick delivery of products to all consumers who prefer
online shopping. Asda has structured its business operational structure with dynamic technology usage of
production equipments where company has taken decisions to upscale large varieties of
goods and services among all stores. Consumers have high goodwill for brand where they
accept brand to serve high tech products and services according to changing consumers
preferences in business world (Khalid and Rahman,2019).These factors has enabled
company to position itself firmly with successful brand image and high delivery of all
services with advanced technology usage.
Environmental factors
 M&S management has taken business strategies to operate environmental friendly usage
in all products and services to keep company performance in accordance with
environmental factors. Company has taken decisions to use reusable products in all office
equipments and curb carbon emission in all production of clothes mines. These factors
has positively impacted business operations of company to implement change in society
and present consumers with more innovative quality products.
 Sainsbury's management has implemented business operations with reusable packaging
equipments in all products and include environmental friendly goods in all categories.
These macro environment factors has positively impacted company performance in
comparison with other brands globally and enhanced consumers established goodwill
among market share.
 Pestle analysis has various positive impact on company performance as it enables the
management to get wider outlook on all key challenges and opportunities of growth
ahead for establishing firm place in dynamic business world.
 However the negative impacts of pestle analysis are that some companies management
find it elaborate procedure and also the operational costs is also many times very much as
per financial terms. Some company may not have that much funds and the time
potentiality along with skills to invest in pestle analysis.
The impact of these macro environmental practises on business operations of retail
companies in UK industry has several positive as well as negative impacts due to which
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